Now this really is a surprise, isn\’t it?

Margaret Hodge, PAC chairman, said: “Investment in infrastructure is crucial for stimulating growth.” But she said the Treasury had not properly prioritised its 200 key projects – including roads, rail, airports, and ports – and had deterred investment by policy indecision.

“Investors will be reluctant to invest… until government policy is clear and consistent. Uncertainty can deter or delay investment and [add to] costs,” the report states.

Yes, that\’s the problem with having the government run infrastructure projects. They\’ll be run like all government projects. Badly and late. This is simply inherent in using politics and bureaucracy to do something.

It also rather kyboshes the idea that we should use infrastructure spending to boost aggregate demand. The actual boost to demand is going to come some years after the demand needed boosting……

11 thoughts on “Now this really is a surprise, isn\’t it?”

  1. “They ll be run like all government projects. Badly and late.”
    You don’t even need that excuse.
    The feature of government infrastructure projects is that they’re run over an extended period. The early phases are all planning & design which comes down to a few highly paid bods in offices. Then they move to the preparation stage which adds some less well paid workers handling very expensive plant & machinery, often imported. It’s only quite late in a project when all the hands on stuff that employs lots of skilled & unskilled workers becomes necessary. Round about the time of the next upswing in the economic cycle, when those guys would be able to get jobs anyway. So you end up with a load of Polish plumbers or whatever, to fill the labour shortage.

  2. Its intersting to see that Hodge twat talking about uncertainty when it is exactly what she does when complaining about companies not being moral when not paying taxes they do not have to…

  3. I’m pretty much convinced that the country needs very little of this “infrastructure” to improve growth now. Nuclear power stations, but beyond that, our problems are related to things like the incentives to work rather than faster broadband or more roads.

  4. “The actual boost to demand is going to come some years after the demand needed boosting…”. Too right. Unfortunately there is a never ending queue of ignorant gits who keep repeating the mantra that infrastructure projects are a way of escaping recessions.

    I

  5. The problem is, La Hodge and her like are not talking about an ROI from investment, they’re talking about a Keynesian multiplier, which is supposed to boost aggregate demand virtually instantly and is independent of what “infrastructure” you build. Which is barking nonsense. But that’s what she’s talking about.

  6. Did you say:

    Which is barking nonsense. But that’s what she’s talking about.

    ?

    Margaret Hodge talking barking nonsense? Of course, that’s what she’s talking. It’s all she ever talks. That, and rampant hypocrisy.

  7. How about repairing the infrastructure we have? Quicker, less chance of money being wasted. Admittedly, a programme to repair potholes is not very glamourous.

  8. Luke-

    Because in a Keynesian stimulus, it’s the spending of the money that matters not what you spend it on. As such, being efficient and spending less money is counterproductive.

  9. @ Luke
    Where I live the (Conservative-controlled) council *does* repair potholes, and streetlights, and cleans the streets (it also kept all its libraries, albeit shorter hours), without increasing Council Tax. So may I suggest that you ask yours why they don’t?

  10. Ian B, point half taken, but if you want a Keynsian stimulus, (a)you want it now, and (b) you might as well spend it on something useful (the digging holes thing was not a recommendation of ideal policy, just better than doing nothing – as John Kay said somewhere, why pay people to dig holes when you can pay them to fix holes?).

    John 77, not sure on the details, but generally local authority funding is a nest of special pleading, and outright bias. Your conservative LA has probably had its central govt funding cut less than Labour LAs. (Don’t bother saying Labour is as bad.)

  11. So Much for Subtlety

    Luke – “How about repairing the infrastructure we have? Quicker, less chance of money being wasted. Admittedly, a programme to repair potholes is not very glamourous.”

    Not just not very glamorous – it does not get politicians photo opportunities. If you build a new freeway to Scotland there are endless chances to get your picture in the paper. You will be invited to endless dinners and events by developers. If it all goes wrong, you can pose as a champion of the Home Counties by refusing planning permission. It is a win-win for a politician.

    The routine hum-drum work of governing gets you no plaudits, no press coverage and no fame. So why do it?

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